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Changing federal spending priorities: why cities belong at the table.

NLC's officers met last January and set as one of our organization's goals an effort to develop a more collaborative relationship with state elected officials. We reported a major success in that effort in last week's paper.

NLC President Glenda Hood and others of NLC's leadership successfully concluded a far-reaching agreement with the leadership of the National Conference of State Legislatures and the National Association of Counties.

We reached consensus on a general statement of principles on federal entitlement and mandatory spending which addresses both the impact of these programs on the federal deficit and on intergovernmental and intergenerational relations.

When we began this joint effort, we knew that for a number of years the relationship between states and municipalities had become more and more strained. The fiscal pressures on both ends and the growing fiscal disparities within states have pitted individual community leaders and state leagues against governors and state legislatures.

The leadership of our three organizations determined that developing a joint proposal on controlling federal entitlement programs and mandates could serve as a means of collaborating on a critical issue affecting both levels of government and on which many of us have little understanding.

Perhaps more than anything else in this mutual undertaking, we learned.

We learned that the composition of federal spending has changed dramatically over the last three decades, both in actual dollars and as priorities in the federal budget.

Defense spending declined from over 50 percent of total spending in 1962 to 20 percent in 1992; spending on mandatory programs increased from 30 percent to 50 percent over the same period; and domestic discretionary spending declined from 21 percent to 14 percent of total spending - the same as interest on the national debt.

So we explored the intergovernmental effects of federal entitlement programs. What is the purpose of these programs, how do they operate, and what is their impact on state and local budgets and delivery of services? We set out to examine the need for responsible reform to which the membership of our three organizations could agree.

What are federal entitlement programs?

We learned that entitlement programs provide direct benefits to individuals automatically and outside the annual appropriations process. They are federal benefits - some provided by way of states and local governments - to which individuals are legally entitled. They are mandatory, not discretionary federal spending programs. Major federal entitlement programs include Social Security, Medicare, Medicaid, food stamps, and farm price supports. In 1992 entitlement spending is expected to cost about $700 billion - more than half of all federal spending, and by far the fastest growing part of the federal budget and deficit.

Risks

We realized that taking on controlling entitlements is a politically risky course. The issue is intergenerational: what priorities does the nation set for its budget? But we know the issue will be addressed; the question is who will address it and how - and, if NLC does not address it, will the impact of a solution simply be imposed or downloaded on local governments.

Our NLC leadership is concerned about far more serious underlying trends and problems in communities - trends and problems that will not be resolved or addressed by economic recovery. Having resources to address and confront the future of our cities is a fundamental issue.

Thus the leadership undertook to develop a joint position on structural, long term changes in budget priorities - which will require controlling federal entitlement programs.

Next Steps

The agreement and adoption of our joint statement laid a foundation upon which to undertake an intergovernmental education project on mandates and entitlements, a basis upon which to hold press conferences, and joint positions on specific issues before the Congress.

Our respective Presidents have written to each of the three Presidential candidates to relay our agreement and request that they be part of any federal discussions to change federal entitlement spending programs.

Now we plan to begin a joint education effort. We will be running a series of feature articles in our newspaper on federal en titlement and mandatory spending - to help you, as leaders in your communities - understand the potential consequences of changes, as well as the consequences of refusing to make changes.

And we plan to continue to work together with our partners to find ways to help you educate your constituents. In the end, we are convinced that if they understand these huge spending programs, the President and Congress will make sure we are full partners at the table before any changes are made.

Why did we select entitlements?

* They consume more than half of the federal budget and are crowding out all

other portions of the budget.

* They impose huge mandates on states, forcing states to cut all aid to local

governments and impose state unfunded mandates.

* The uncontrolled growth of Medicaid absolutely hammers state budgets.

Because states are required to match federal Medicaid payments to states,

this has become a huge, unfunded federal mandate eating governors and

state legislators out of house and home.

* Absent controlling these soaring mandated costs, states will have no choice

but to continue to cut aid to local governments and impose or pass an unfunded

mandates. If the federal government does control it, it will be critical that

we all be at the table instead of having it done to and despite us.

* Congress and the White House are virtually certain to reopen the 1990 budget

agreement next year to set an agreement on reducing the growth of federal

entitlement spending - unless states and local governments have a proposal,

there is almost no chance to have a place at that table.

* If Congress and the White House reach an agreement limiting federal spending

on entitlements, they are almost certain to pass the buck to states: states

will have to continue to provide the same level of mandated benefits, it is just

that the federal share or contribution would sharply decline.
COPYRIGHT 1992 National League of Cities
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes related information on entitlements
Author:Borut, Donald J.
Publication:Nation's Cities Weekly
Date:Oct 26, 1992
Words:981
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